BEML Ltd — Q4 FY25 earnings call

Call held 16 Jun 2025

Management summary

BEML delivered a strong FY25 performance characterized by a 40% surge in the Defence segment and robust order inflows of ₹6,800 crores. Despite headwinds in the Rail & Metro sector, the company maintained margin expansion through a 2% reduction in material costs and a high-margin sustenance business. Management is highly bullish on FY26, targeting a 150 bps EBITDA margin improvement and a doubling of Defence turnover based on current order execution.

Highlights

  • Order inflow for FY25 reached ₹6,800 crores, representing a 28% YoY growth

  • EBITDA margin expanded to 13.2%, following a consistent upward trajectory from 5% in previous years

  • Defence segment saw phenomenal growth of 40%, with its contribution to total revenue increasing from 19% to 27%

  • Mining segment remained the largest contributor at 54% of revenue, growing 11% YoY

  • Sustenance business (spares and services) contributed 26% to the top line with superior margins

  • Management guided for a 150 bps EBITDA margin improvement in the coming year

  • Order book target for the year-end set at ₹22,000 - ₹23,000 crores

  • Planned Capex of ₹1,800 crores over 5 phases to expand car manufacturing capacity to 700-800 per annum

Concerns

  • Supply Chain Bottlenecks (Forging and Casting)

Key financials

  1. Order Inflow ₹6,800 Cr +28%YoY
  2. EBITDA Margin 13.2%
  3. Sustenance Revenue Share 26%
  4. Inventory Days 160 days
  5. Turnover per Employee ₹76 lakh

What they filed

Q1 FY27: revenue up 29.3%, net profit up 57.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue860 876 1,653 634 839 −2%1,083 +24%1,794 +9%820 +29%
EBITDA73 60 423 -48 73 +0%4 −93%272 −36%2 +104%
Net profit51 25 288 -64 55 +8%-23 −192%179 −38%-27 +58%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentRevenue ContributionGrowth
Mining54%11%
Defence27%40%
Sustenance (Spares & Services)26%—

Guidance & targets

Margin

  • EBITDA Margin Improvement Margin · FY26 · High confidence 150 bps

    Previously 100 bps → 150 bps

    My guidance is 150 basis points in EBITDA over last year's number.

    — Shantanu Roy, CMD

Revenue

  • CAGR Growth Revenue · FY26 · High confidence 20%
    So considering all this definitely, a 20% CAGR growth is very much achievable.

    — Shantanu Roy, CMD

Capex

  • Total Planned Capex Capex · next 5 phases · Medium confidence ₹1,800 crores
    Capex planned is 1800 crores, but that will be in 5 phases. The 1st phase will be around 225 crores.

    — Shantanu Roy, CMD

Capacity

  • Annual Car Manufacturing Capacity Capacity · next 2-3 years · High confidence 700-800 cars

    From 200-277 cars today

    We want to go up to a total capacity of around 700 to 800 cars per annum.

    — Rajiv Kumar Gupta, Director Rail and Metro

Debt

  • Inventory Days Debt · next 1-2 years · Medium confidence 130 days

    From 160 days today

    So the 1st step is to bring down from 160 to around 130, and that itself will be a herculean task.

    — Shantanu Roy, CMD

Headcount

  • Employee Cost as % of Turnover Headcount · FY26 · Medium confidence 17%
    the employee expenses should come down to around 17%. That is a challenge we have.

    — Shantanu Roy, CMD

Risks & concerns

  • Supply Chain Bottlenecks (Forging and Casting)

    high

    Quality of castings and availability of high-end forgings in India are critical challenges for engine and rail programs.

    Management acknowledged

  • Workforce Superannuation

    medium

    Almost 20% of the workforce is set to retire soon, necessitating a massive talent onboarding and skill-gap filling exercise.

    Management acknowledged

  • Working Capital and Receivables in Metro

    medium

    10-15% of payment is withheld in Metro projects until the end of the warranty period, leading to delayed cash flows.

    Both acknowledged

Areas of evasion (1)

  • Specific names of private sector forging partners were withheld.

Q&A highlights

3 direct
Inventory Write-offs and Ageing Direct
We are not thinking of writing off anything... anything beyond one year. So 1, 2, 3 years is the majority of the chunk of the inventory. So we have to use that material.

Clarifies that high inventory is WIP/ageing stock rather than obsolete material requiring write-downs.

Capex Funding for Bhopal Facility Direct
For the Bhopal plan, we are definitely looking at the partners who can do the debt funding. Already some financial institutions, some PSU banks have also shown lot of interest.

Indicates a shift toward debt funding for major expansions while maintaining internal accruals for existing facilities.

Metro Delivery Delays (Vande Bharat) Direct
Since the testing and the CCRS inspection of the 1st prototype have not been completed, we could not deliver the balance 9 trains, but the car body shells are already ready for all 10.

Explains the revenue recognition delay in the Rail segment due to regulatory/testing bottlenecks rather than manufacturing failure.

2 min read 5 chapters

Detailed narrative

Order Book Momentum and Doubling Guidance

BEML is targeting a significant expansion of its order book, aiming for ₹22,000 - ₹23,000 crores by the end of the year. FY25 saw an order inflow of ₹6,800 crores, a 28% increase over FY24. Management expects ordering flow in FY26 to double or more than double compared to FY24 levels, driven by major tenders in Rail, Metro, and Defence. A massive ₹30,000 crore MRVC tender for 2,856 cars is expected to be floated in the next two months, providing a long-term growth runway.

Margin Expansion Strategy and Sustenance Business

The company is guiding for a 150 bps improvement in EBITDA margins, building on the 13.2% achieved in FY25. This expansion is supported by a 2% reduction in material costs and a strategic shift toward the high-margin sustenance business (spares and services), which now contributes 26% to the top line. Management's ultimate aim is for sustenance to contribute more than 30% of total revenue, as it adds significantly to both the top and bottom lines.

Capacity Ramp-up and Capex Plans

To meet the growing order book, BEML is executing an ₹1,800 crore Capex plan over five phases. The goal is to increase manufacturing capacity from the current average of 200 cars to 700-800 cars per annum within the next 2-3 years. The new facility at Bhopal and the operationalization of the Bangalore facility by November/December 2025 are central to this strategy. The first phase of Capex involves an investment of ₹225 crores to ensure positive cash flow within 12-14 months.

Defence Segment as a Growth Engine

FY25 was described as a 'watershed moment' for the Defence segment, which grew by 40% and now accounts for 27% of revenue. BEML has achieved over 95% indigenization in critical platforms like the 12x12 high-mobility vehicles. Management expects Defence turnover to more than double in FY26 if current orders in hand are executed fully. Emergency procurement orders and new systems like mechanical minefield marking equipment are expected to further boost this segment.

Working Capital and Inventory Challenges

Managing working capital remains a 'herculean task,' with inventory currently standing at 160 days. The company aims to reduce this to 130 days in the first step, with a long-term aspiration of 90 days. High inventory in FY25 was partly due to WIP for Vande Bharat trains that could not be converted to sales due to prototype testing delays. Additionally, the Metro segment faces cash flow challenges as 10-15% of payments are typically withheld until the end of the warranty period.

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